The proposed £3.7billion merger of Tesco and cash-and-carry firm Booker is to undergo an in-depth probe amid concerns it could harm competition and result in less choice for customers.

The Competition and Markets Authority, which opened its initial investigation in May, said the case will now be referred to a group chosen from its independent panel members, with a final report published before Christmas.

The announcement follows a request by Tesco and Booker to ‘fast-track’ the investigation to the next stage.

The CMA believes that the tie-up could harm competition in more than 350 local areas where there is currently an overlap between Tesco shops and Booker-supplied ‘symbol’ stores such as Londis or Budgens, which Booker owns as franchises.

‘There are concerns that, after the merger, there is potential for Booker to reduce the wholesale services or terms it offers the ‘symbol’ stores it currently supplies, in order to drive customers to their local Tesco,’ the CMA said.

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Competition officials will seek views and evidence from all those potentially affected by the merger, like local shops, in order to assess whether the deal could reduce competition.

Booker, which last week revealed a near-10 per cent rise in like-for-like sales, is the largest wholesaler in the UK. Aside from owning Londis and Budgens, it also supplies thousands of convenience stores and restaurants like Wagamama and Carluccio’s.

Questions: Tesco has faced criticism from investors over the deal

Tesco is the UK’s biggest supermarket, and the £3.7billion merger could result in a combined giant owning more than a quarter of the UK convenience store market.

Tesco has faced criticism from investors over the deal, with some shareholders branding the takeover tilt a ‘distraction’ and urging the Big Four grocer to scrap it.

A Tesco spokesperson said: ‘We are pleased that the CMA has accepted our fast track request, and we look forward to continuing our engagement over the coming months.

‘This merger has always been about growth, and we remain convinced that it will bring benefits for consumers, independent retailers, caterers, small businesses, suppliers and colleagues.’